National Pensions - CPA Oriented » Combination Plans
The 2006 Pension Protection Act most notably modified IRC 404a(7). This now allows business owners to deduct contributions to both a defined contribution (i.e. 401(k)/profit sharing) and a defined benefit pension plan. Recently, the Workers Retiree Employer Recovery Act (WRERA) made law on December 23, 2008 that clarified deductions for funding both types of plans (Non-PBGC plans are limited to 6% of pay in the defined contribution). Combining plans can result in significantly higher pre-tax contributions.